Leeds Building Society plans mortgage lending jump

Image caption,
Leeds Building Society has seen its savings balances swell to a record £7bn in the past year

Leeds Building Society has announced plans to increase its mortgage lending by 25% this year as it unveiled record operating profits for 2010.

The UK's fifth largest building society said it hoped to lend £1.25bn in 2011 after its savings balances grew by £245m during the year to a record £7bn.

That bucked the trend for the mutual sector and is twice the amount expected for a building society of its size.

Operating profits last year rose to £84.5m from a record £80.1m in 2009.

The decision to lend more money for mortgages comes after UK mortgage lending as a whole fell 13% in January from the previous month to the lowest level for a year.

'Prudent approach'

Chief executive Ian Ward said: "Leeds Building Society has again delivered a very good set of financial results despite the continuing challenges for the financial services sector."

The group said it had continued to adopt a "prudent approach" to lending, with all residential mortgages backed by savers' deposits.

The mutual sector has complained of stiff competition for savers' money from the nationalised and part-nationalised banks and from government-backed National Savings and Investments during the past couple of years.

Leeds Building Society credited some of its success on the savings front to the popularity of its fixed rate bonds, which allowed customers unlimited access to a proportion of their money without penalty during the product's term.

However, difficult economic conditions led to the group suffering losses of £44.2m through defaults on residential and commercial lending, although this was down from £52.5m in 2009.

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